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UNCLAS SECTION 01 OF 11 TOKYO 002772 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; 
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; 
SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; 
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
 
SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/20/07 
 
 
TOKYO 00002772  001.2 OF 011 
 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
4) Assistant Secretary Hill in Tokyo: Mid-July meeting likely for 
next round of six-party talks; BDA fund issue has been resolved 
 
5) LDP's historical education panel concludes that the Nanjing 
Massacre was bogus 
 
Political agenda: 
6) Upper House elections set for July 29 due to 12-day extension of 
current Diet session 
7) Opposition parties react sharply to 12-day extension of Diet 
session 
8) Ruling and opposition camps clash in the Diet yesterday 
9) Three education-reform bills to be enacted today 
10) North Korea human rights bill amendment passes Lower House 
11) Small party wants ex-Peruvian president Fujimori as an Upper 
House candidate 
12) Former Foreign Minister Machimura of the LDP: If the election 
were held today, the LDP would be defeated 
 
13) Lawmaker Muneo Suzuki, Foreign Ministry official Sato - both 
arrested five years ago for ODA scam - write book attacking the 
ministry 
 
Defense affairs: 
14) Iraq special measures law extension clears Upper House committee 
 
15) Defense Minister Kyuma called "anti-SDF" by opposition lawmaker 
in the Diet 
16) Kyuma, defending SDF monitoring of civilians, says whole nation 
is subject to surveillance 
 
17) MHI, Boeing form tie up to produce a domestic passenger plane 
for Japan 
 
18) Government's newly released "big-boned economy policy 
guidelines" called "boneless" 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi, Yomiuri, Sankei & Tokyo Shimbun: 
3 killed in Tokyo spa blast 
 
Mainichi: 
Three education reform bills to be enacted today 
 
Nihon Keizai (Nikkei): 
Companies to be allowed to apply on behalf of employees to integrate 
pension records 
 
Akahata: 
JCP Chairman Shii urges Prime Minister Abe to immediately send 
pension premium payment records to 100 million policyholders 
 
2) EDITORIALS 
 
Asahi: 
 
TOKYO 00002772  002.2 OF 011 
 
 
(1) Structural reform advocacy cannot be seen in 2007 "big-boned" 
reform policy guidelines 
(2) Palestinians should make efforts for reconciliation 
 
Mainichi: 
(1) 2007 basic economic guidelines: Is "a beautiful country" 
economic policy? 
(2) Pneumoconiosis lawsuit: Government must correct its mistake 
 
Yomiuri: 
(1) Economic guidelines must be fleshed out 
(2) Need for strict elevator inspections 
 
Nihon Keizai: 
(1) Prime Minister Abe should implement reform measures rather than 
list them 
(2) International community must fight terrorism to bring stability 
to Afghanistan 
 
Sankei: 
(1) 2007 economic policies short of reform guidelines 
(2) Basic Space Law: Debate for effective use of space urged 
 
Tokyo Shimbun: 
(1) Full picture of unidentified pension premium records fiasco 
remains unclear 
(2) Lack of explanations of bill revising the Iraq Special Measures 
Law will invite public distrust 
 
Akahata: 
2007 economic guidelines: Consideration to business circles will 
deepen vicious circle 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, June 19 
 
NIHON KEIZAI (Page 2) (Full) 
June 20, 2006 
 
08:02 
Met with Deputy Chief Cabinet Secretary Suzuki. 
 
08:30 
Attended a meeting of the Urban Revitalization Headquarters in the 
Diet building. Then attended a cabinet meeting. Foreign Minister 
Aso, MLIT Minister Fuyushiba and MEXT Minister Ibuki remained. 
 
10:00 
Upper House Education, Culture, and Science Committee. 
 
12:28 
Arrived at the Kantei. 
 
13:15 
Upper House Education, Culture, and Science Committee. 
 
18:10 
Meeting of the Council on Economic and Fiscal Policy at the Kantei. 
 
18:24 
Arrived at the official residence. 
 
TOKYO 00002772  003.2 OF 011 
 
 
 
19:32 
Special cabinet meeting at the Kantei. Foreign Minister Aso 
remained. Then met with Deputy Chief Cabinet Secretary Matoba. 
 
20:01 Returned to the official residence. 
 
4) Visiting US Assistant Secretary of State Hill says next round of 
six-party talks "will be held in mid-July" with "resolution" of BDA 
issue 
 
ASAHI (Page 4) (Full) 
June 20, 2007/06/20 
 
US Assistant Secretary of State Christopher Hill, chief negotiator 
in the six-party talks, yesterday arrived in Tokyo and when asked 
about North Korea's frozen funds at Banco Delta Asia (BDA) in Macao, 
he confirmed that the money was sent to a Russian bank, noting, "As 
far as I know, the money has been sent to North Korea's bank 
account." He stated that the BDA issue has been generally resolved. 
He was replying to reporters at Haneda Airport. 
 
Earlier in the day in Seoul, where he was visiting ahead of Japan, 
Hill spoke of the question of the provision of energy to North Korea 
and expressed hopes that Japan would play an active part to 
facilitate the denuclearization of North Korea, saying, "I hope to 
see Japan join the provision. 
 
Late yesterday, Hill met with his Japanese counterpart in the 
six-party talks, Kenichiro Sasae, director-general of the Asian and 
Oceanian Affairs Bureau of the Foreign Ministry and regarding the 
BDA issue, he told Sasae: "It has been in principle resolved." Both 
officials agreed on the need for both Japan and the United States to 
work in close cooperation to resolve the pending issues between 
Japan and North Korea, including the abductions of Japanese citizens 
by North Korea. After the meeting, Hill, when asked about when the 
next round of the six-party talks will be held, made this comment: 
"I hope the next meeting will take place by mid-July." 
 
5) "Nanking Massacre was a fabrication," a parliamentary panel of 
lawmakers says 
 
SANKEI (Page 5) (Abridged) 
June 20, 2007 
 
The Council to Consider the Future of Japan and History Education 
(chaired by former Education Minister Nariaki Nakayama), a 
parliamentary group of like-minded lawmakers of the ruling Liberal 
Democratic Party, yesterday held a press briefing in Tokyo, in which 
it unveiled the results of a fact-finding survey of the Nanking (TN: 
Nanjing) Incident and indicated a plan to seek in the months ahead 
to remove groundless descriptions, photos, and other materials 
displayed at the anti-Japanese war memorial museum in China. 
 
The council had also analyzed newspaper articles issued at the time 
of the capture of Nanjing since this past February and listened to 
views of informed individuals about those articles. The facts the 
council found through the survey include that: (1) there was no 
description of a massacre found in domestic and foreign press 
articles; and (2) a Chinese government representative stated before 
the League of Nations in 1938 that "20,000 people were killed and 
thousands of people were injured in violence in Nanjing," but this 
 
TOKYO 00002772  004.2 OF 011 
 
 
speech was not included in a resolution denouncing Japan. 
 
The council has concluded that the Nanking Massacre was a 
fabrication and nothing more than political propaganda. The council 
intends to seek to remove inappropriate descriptions and 
anti-Japanese photos coming from unnamed sources displayed at 
anti-Japanese war memorial museums in China.  Also, it intends to 
point out errors in facts in films dealing with the Nanking 
Incident. 
 
On the question of how many people were killed in the capture of 
Nanjing, the council refrained from mentioning the number by noting: 
"At the time, the Asahi Shimbun and the Mainichi Shimbun were major 
press companies that sent the largest numbers of reporters to 
Nanjing, but they did not determine the number of victims. Given 
this, it's impossible for lawmakers to mention the number." 
 
6) Upper House election likely to be held on July 29 
 
MAINICHI (Page 1) (Excerpts) 
June 20, 2007 
 
The government and ruling coalition decided yesterday to extend the 
current Diet session, which will end on June 23, for 12 days until 
July 5. If the session is extended for 12 days, based on the Public 
Office Election Law the official campaign for the House of 
Councillors election will start on July 12 and the polls will take 
place on July 29, a week later than the initially expected July 22. 
The ruling Liberal Democratic Party (LDP) and its coalition partner, 
New Komeito will make a formal decision on the extension within one 
or two days and their secretaries general will propose it to Speaker 
of the House of Representatives Yohei Kono. The speaker will then 
put the extension proposal to a vote at a Lower House plenary 
session by June 22. The standoff will inevitably intensify between 
the ruling bloc and opposition camp, which has criticized the ruling 
coalition for using a strong-arm approach in steering the Diet. 
 
Prime Minister Shinzo Abe is determined that the 12-day extension of 
the ongoing session is necessary to play up his government's effort 
for reforms for the upcoming Upper House election by enacting such 
key bills as one amending the National Civil Service Law . Although 
an extension of five or less days does not affect the original 
schedule of holding the Upper House race on July 22, thinking that 
the five days are not insufficient for deliberations on important 
bills, the ruling side, including the LDP Upper House caucus, agreed 
on the 12-day extension. 
 
LDP Upper House Caucus Secretary General Toranosuke Katayama stated 
in a press conference yesterday: "We must prioritize the enactment 
of the bills even though the extension will affect the voting day." 
He indicated in his remarks that the extension of the session for 12 
days is absolutely necessary. 
 
7) Battle between ruling and opposition camps intensifies due to 
ruling bloc's decision to extend Diet session for 12 days 
 
MAINICHI (Page 5) (Excerpts) 
June 20, 2007 
 
The government and the ruling parties decided to extend the current 
Diet session for 12 days, delaying the Upper House election to July 
¶29. All opposition parties furiously reacted to the step, calling it 
 
TOKYO 00002772  005.2 OF 011 
 
 
partisan politics. The decision to delay the election for one week 
has sparked mixed reactions in the ruling bloc, with some hopeful to 
see a weakened public outcry over the pension debacle and some 
others anticipating fiercer criticism of the Abe administration. The 
ruling camp's arm-twisting approach to priority bills has inflamed 
the opposition camp's antagonistic stance in the Diet in its closing 
stage. 
 
Minshuto (Democratic Party of Japan) Secretary General Yukio 
Hatoyama in a press conference yesterday criticized the ruling bloc, 
saying: "I can sense the ruling camp's intention to divert public 
attention form the pension debacle. It's an act that derides the 
public." Japanese Communist Party Head of the Secretariat Tadayoshi 
Ichida also criticized the ruling bloc's decision, describing it as 
an attempt to enlarge the sumo ring as it is about to be pushed out. 
Social Democratic Party head Mizuho Fukushima referred to it as a 
quintessentially self-centered action. 
 
The row between the ruling and opposition blocs intensified 
yesterday. The ruling parties rammed the bill amending the Iraq 
Special Measures Law and three education reform bills through the 
Upper House Foreign Affairs and Defense Committee and the Education, 
Culture and Science Committee. In reaction, the ruling bloc plans to 
submit to an Upper House plenary session today a resolution removing 
the two chairs from the posts. 
 
8) Ruling bloc forcibly takes vote on three education reform bills; 
Opposition camp to file no-confidence motion against Lower House 
speaker 
 
TOKYO SHIMBUN (Page 2) (Abridged slightly) 
June 20, 2007 
 
With the ongoing Diet session scheduled to close on June 23, the 
confrontation between the ruling and opposition camps intensified in 
both chambers of the Diet yesterday. The ruling coalition bulldozed 
three education reform bills and a bill amending the Iraq Special 
Measures Law through the Upper House Education, Culture and Science 
and the Foreign Affairs and Defense Committees. In a Lower House 
plenary session, the ruling bloc also adopted a motion barring 
Minshuto (Democratic Party of Japan) lawmaker Akira Uchiyama from 
attending a Diet session for 30 days. The opposition camp put up 
do-or-die resistance, with three parties -- Minshuto, the Social 
Democratic Party, and the People's New Party - submitting a 
no-confidence motion against Lower House Speaker Yohei Kono. 
 
The Lower House plenary session that was scheduled to vote on the 
penalty motion against Uchiyama began shortly after 5:00 p.m., four 
hours behind schedule, due to the opposition camp's stiff 
resistance. The motion was adopted by a majority vote backed by the 
Liberal Democratic Party and the New Komeito. The Minshuto, SDP, PNP 
lawmakers walked out of the session before a vote is taken, and the 
Japanese Communist Party members voted against the motion. 
 
In reaction, Minshuto, the SDP and PNP submitted a no-confidence 
motion against Lower House Speaker Kono saying, "The huge coalition 
allows no questions in running the Diet. The punishment against Mr. 
Uchiyama is extremely irresponsible." The no-confidence motion 
against Kono is scheduled to be put to a vote today. 
 
The Education, Culture and Science and the Foreign Affairs and 
Defense Committees also conducted Deliberations, but when members 
 
TOKYO 00002772  006.2 OF 011 
 
 
finished asking questions, Yasu Kano and Tadashi Taura declared an 
end to the question-and-answer session. The bills cleared the 
session despite resistance from opposition members. The ruling bloc 
intends to enact them in an Upper House plenary session today. 
 
In reaction to the bills' passage, Minshuto decided to submit to an 
Upper House plenary session today a resolution removing Kano and 
Taura from the respective committees. 
 
The opposition camp is becoming increasingly antagonistic toward the 
ruling bloc, as seen in the fact that it walked out of an Upper 
House Health, Labor and Welfare Committee session and rejected 
asking questions at an Upper House Cabinet Committee meeting. 
 
9) Ruling camp ready to pass three education bills today 
 
MAINICHI (Top Play) (Excerpts) 
June 20, 2007 
 
Three education-related bills were adopted by a majority from the 
Liberal Democratic Party and the New Komeito in a meeting of the 
House of Councillors Education and Science Committee last night. In 
the session, opposition parties approached the chairperson's desk 
and offered strong objections. The government and the ruling parties 
intend to enact the bills, to which Prime Minister Shinzo Abe is 
giving top priority in the current Diet session, in an Upper House 
plenary session today. Both the ruling parties submitted a 22-item 
supplementary resolution, including a measure to boost the education 
budget. The council adopted the resolution, but rejected four bills, 
including a counterproposal by the Democratic Party of Japan 
(Minshuto). 
 
The bills adopted yesterday are those revising the School Education 
Law, the Local Education Administrative Law, and the Teacher's 
License Law. The prime minister said in a question-and-answer 
session: "In an era of increasing economic globalization, it is 
necessary for people to become healthy and strong enough to survive 
global competition. It might be a part of education to bring up 
persons to have competitiveness, strength, and beautiful mind." 
 
The revised School Education Law defines "patriotism" as "a mind 
that loves the nation and homeland," regarding cultivating such a 
mind as one purpose of compulsory education. The law also proposes 
establishing in schools new posts such as vice principal. The 
revised Local Education Administrative Law will create the 
government's authority to give instructions or correction orders to 
education boards, reviving the correction-order right, which was 
abolished in 1999. New provisions will also be established to allow 
education boards to give advice or aid to private schools by 
prefectural governors. 
 
10) Bill revising the North Korea Human Rights Law clears Lower 
House 
 
YOMIURI (Page 4) (Full) 
June 20, 2007 
 
An amendment to the North Korea Human Rights Law aimed at 
restricting the government from providing any new economic 
assistance to North Korea unless the issue of abductions of Japanese 
citizens by North Korea makes progress was approved by a majority 
from the governing Liberal Democratic Party, the major opposition 
 
TOKYO 00002772  007.2 OF 011 
 
 
Democratic Party of Japan (Minshuto), and the junior governing 
coalition partner New Komeito in the Lower House plenary session 
yesterday. The bill was sent to the Upper House. 
 
11) People's New Party asks Fujimori to run for the Upper House 
election 
 
YOMIURI (Page 4) (Full) 
June 20, 2007/06/20 
 
The People's New Party (PNP) is considering fielding former Peruvian 
President Fujimori (68) in the upcoming Upper House election, 
sources revealed yesterday. PNP Acting Representative Shizuka 
Kamei's secretary visited Fujimori, who has been under house arrest 
in Chile and asked him to run for the election. Whether Fujimori 
will run for proportional representation or in a Tokyo constituency 
is being discussed in the party. Reportedly, Fujimori refrained from 
giving a prompt answer. Fujimori has Peruvian nationality as well as 
Japanese nationality. Under the Public Office Election Law, he is 
qualified to run for a national election in Japan. 
 
12) LDP's Machimura, Tsushima, Koga: If Upper House election held 
now, LDP will lose seats 
 
ASAHI (Page 4) (Full) 
June 20, 2007 
 
Former Foreign Minister Nobutaka Machimura, former Health and 
Welfare Minister Yuji Tsushima, and former Liberal Democratic Party 
Secretary General Makoto Koga got together yesterday in a Japanese 
 
SIPDIS 
restaurant in Tokyo. The three senior LDP members shared the 
perception on the July Upper House election that if the election 
takes place now, the LDP will lose seats. They confirmed that the 
need for all the party to be represented in fighting in the Upper 
House race. 
 
13) Suzuki and Sato criticize Foreign Ministry at party celebrating 
publication of their book five years after their arrest 
 
MAINICHI (Page 5) (Abridged slightly) 
June 20, 2007 
 
A talk show was held in Tokyo yesterday to celebrate the publication 
of a book titled, Looking Back: Where Did We Go Wrong? (Hansei: 
Watashitachi wa naze shippai shita no ka?) coauthored by House of 
Representatives lawmaker Muneo Suzuki, who also heads the New Party 
Daichi, and former Foreign Affairs Ministry Intelligence and 
Analysis Bureau chief analyst Masaru Sato, who is on leave. Suzuki 
and Sato were arrested five years ago in 2002 on suspicion of 
accepting bribes and other charges, and breach of trust, 
respectively. Sato is still appealing. At the party, Suzuki said, "I 
knew too much about the Foreign Ministry, and that's why the 
ministry suddenly reversed its position." Sato highlighted the need 
for the ministry officials to get rid of the mistaken elitist 
mentality. 
 
14) Iraq law clears Diet panel 
 
SANKEI (Page 5) (Full) 
June 20, 2007 
 
A bill to revise the Iraq Special Measures Law for extending the 
 
TOKYO 00002772  008.2 OF 011 
 
 
Self-Defense Forces' activities in Iraq for two years passed the 
House of Councillors Committee on Foreign Affairs and Defense 
yesterday with a majority of votes from the ruling coalition. The 
bill is expected to clear the House of Councillors in its plenary 
setting today. However, there are critical voices from within the 
ruling Liberal Democratic Party about stipulating the SDF's overseas 
activities in a special measures law and renewing the government's 
masterplan almost every year to continue SDF activities overseas. 
"The SDF is being used as a political tool," one LDP lawmaker 
complained. Another has noted that the SDF cannot respond to 
situations at once. It will likely be a political challenge after 
this summer's election for the House of Councillors to create a 
permanent law that will make it possible for Japan to send the SDF 
overseas as needed. 
 
The Air Self-Defense Force has sent three C-130 transport planes and 
continues its airlift support for the Iraq-based multinational 
forces and the United Nations. The government will make a cabinet 
decision in July to adopt a masterplan that extends the ASDF's 
mission in Iraq for another year. 
 
Meanwhile, the Antiterror Special Measures Law, under which Japan 
has sent a Maritime Self-Defense Force squadron to the Indian Ocean, 
will also expire in November this year. A bill to revise this 
special measures law will also be before the Diet during its 
extraordinary session to be called this fall. The LDP, in its 
manifesto for the upcoming House of Councillors election, will 
advocate establishing a permanent law for SDF activities overseas. 
 
15) DPJ's Mashiko rebuts Kyuma 
 
TOKYO (Page 2) (Full) 
June 20, 2007 
 
The Ground Self-Defense Force's Intelligence Security Corps was 
recently found to have collected information about groups and 
individuals opposed to Japan's dispatch of the Self-Defense Forces 
to Iraq. In this connection, Teruhiko Mashiko, a member of the 
leading opposition Democratic Party of Japan (Minshuto), was 
referred to as a person conducting "anti-SDF activities." On this 
issue, Mashiko and Defense Minister Fumio Kyuma faced off in a 
meeting yesterday of the House of Councillors Committee on Foreign 
Affairs and Defense. 
 
Mashiko opposed the SDF's Iraq dispatch in a January 2004 meeting of 
SDF veterans. This was described in the GSDF's in-house document as 
"anti-SDF." Taking up this fact, Mashiko bitterly criticized the 
GSDF's information-gathering activities. "I'm worried that civilian 
control may not work and we may be back in the prewar situation." 
 
Kyuma stated before the committee: "They classified remarks into two 
categories, such as 'pro-SDF' and 'anti-SDF' remarks. That's the 
same as in the Cold War days, and it was habitual. We'd like to 
study how to classify them." This was all Kyuma could say, 
indicating he would think twice about using such categories. 
 
16) Whole nation subject to monitoring: Kyuma 
 
MAINICHI (Page 5) (Abridged) 
June 20, 2007 
 
Defense Minister Fumio Kyuma, sitting in yesterday on the House of 
 
TOKYO 00002772  009.2 OF 011 
 
 
Councillors Foreign Affairs and Defense Committee, defended the 
Ground Self-Defense Force's Intelligence Security Corps over its 
collecting of information about civic groups and other targets 
opposed to the activities of the Self-Defense Forces in Iraq. "When 
it comes to the Self-Defense Forces' activities, organizations, and 
security, we can't say it's illegal to check every group," Kyuma 
stated before the committee. "Even lawmakers could be equally 
subject to information gathering as well as all other people of the 
country," Kyuma added. With this, Kyuma indicated that the whole 
nation could be monitored. 
 
Kyuma was replying to questions asked by Shinkun Haku and Teruhiko 
Mashiko from the leading opposition Democratic Party of Japan 
(Minshuto). 
 
Kyuma avoided referring to the authenticity of GSDF documents 
disclosed by the Japanese Communist Party over the GSDF Intelligence 
Security Corps' information-gathering activities. However, the 
defense chief stressed the legitimacy of such activities, saying, 
"We can't conclude it's wrong to collect information." Meanwhile, 
the documents classify collected information into categories like 
"anti-SDF." In this respect, Kyuma stated: "They have been doing 
things like in the East-West Cold War days. In a sense, that's like 
a habit. It's wrong to say 'anti-SDF' (in classifying subjects), so 
I've told officials to study how to classify." 
 
17) Boeing to ink tie-up agreement with Mitsubishi Heavy Industries 
to help promote Japan's first passenger jet 
 
NIIKKEI (Page 1) (Excerpts) 
June 20, 2007 
 
Takuji Kokushida, Paris 
 
Mitsubishi Heavy Industries inked a partnership agreement with the 
Boeing Company of the United States to promote Japan's first 
passenger jet. Mitsubishi aims to commercialize the jet in 2012. 
Boeing is expected to cooperate in marketing and maintenance. To 
initiate the project worth 300-400 billion yen, it is necessary to 
secure enough orders from foreign airlines first. By winning 
cooperation from Boeing, Japan's first passenger jet business has 
taken a step forward. 
 
Mitsubishi Heavy Industries Chairman Takashi Nishioka and Scott 
Carson, Chief Executive Officer (CEO) of Boeing's commercial 
airplane unit, signed the agreement during the International Paris 
Air Show. In an interview with the Nikkei, Carson said: "Both sides 
will establish a working-level panel and quickly work out details." 
 
Mitsubishi plans to commercialize a 70-90 seat small jet. Since 
Boeing manufactures larger aircraft with at least 100 seats, the 
American company has judged that "there is leeway for the company to 
extend cooperation because they play on different markets," 
according to Carson. Boeing has no intention of investing in the 
Mitsubishi project for now. The companies will focus on business 
cooperation in such areas as marketing. 
 
The development cost is estimated at 120 billion yen, of which about 
40 billion yen will be subsidized by the Ministry of Economy, Trade 
and Industry. The remaining 80 billion yen will be shouldered by a 
company to be established by Mitsubishi Heavy Industries, trading 
companies, and banks. Mitsubishi will launch a global marketing 
 
TOKYO 00002772  010.2 OF 011 
 
 
campaign this fall. Looking at the order situation by next spring, 
the company will determine the feasibility of the project. 
 
18) "Boneless" big-boned economic guidelines with focus on upcoming 
Upper House election adopted: Covers wide range of items but puts on 
hold spending cuts 
 
TOKYO SHIMBUN (Page 3) (Excerpts) 
June 20, 2007 
 
The Abe cabinet adopted its first Basic Policy Guidelines on 
Economic and Fiscal Management. A major feature of the economic 
guidelines is that they contain a wide range of items, such as a 
growth strategy, administrative and fiscal reforms, the environment 
and education. Probably with the upcoming Upper House election in 
mind, the government has given consideration to local districts. It 
has also put off many reform items that are painful to voters, 
including the consumption tax and spending reform. The economic 
policy thus turned out to be "boneless" without a solid approach to 
structural reforms. 
 
Showcase 
 
State Minister for Economic and Fiscal Policy Hiroko Ota has 
characterized a Growth Power Boosting Program included in Chapter 2 
as a feature of the economic guidelines adopted this time. 
 
The program set a target of raising the growth rate of labor 
productivity by 50 % .,   to 2.4 % .,   from 1.6 % .,  , the average 
rate of the past 10 years, over the next five years. To achieve that 
end, it proposed raising growth potential to boost the nation's 
basic economic potential through assistance to job seekers and more 
efficient services using information technology (IT). 
 
However, most proposals have already been promoted by government 
agencies. For instance, a proposal for raising the minimum wage, a 
measure to correct income disparities proposed with the Upper House 
election in mind, lacks any specific measures. The report has no 
description of effects resulting from the realization of such a 
policy. 
 
Consumption tax hike put off 
 
One senior member of the Liberal Democratic Party (LDP) Land and 
Transport Department during a meeting of the party's Policy Research 
Council on June 5 said with a look of satisfaction, "A 3 % .,   cut 
in public works was not included in the guidelines thanks to the 
Policy Research Council chairman." 
 
The economic guidelines issued last year incorporated a 1 % .,  -3 % 
.,   cut in public works over the next five years starting fiscal 
¶2007. Following this proposal, a 3.5 % .,   cut was realized in the 
fiscal 2007 budget. 
 
Private-sector members of the Council on Economic and Fiscal Policy 
(CEFP) proposed a 3 % .,   cut over the next five years starting in 
fiscal 2008, as well. They called for incorporating a 3 % .,   cut 
at a CEFP meeting on May 8, pointing out that improper profits made 
through bid-rigging account for about 20 % .,  . 
 
Land, Infrastructure and Transport Minister Tetsuzo Fuyushiba 
rebutted, "Something really bad would happen if more public works 
 
TOKYO 00002772  011.2 OF 011 
 
 
were cut." The discussion thus ended without agreement. 
 
One senior Cabinet Office official revealed, "We met fiercer 
resistance to a proposal for cutting expenditures than we had 
expected due to the upcoming election." In the end, a 3 % .,   cut 
in public works was not included in the report. Prime Minister Abe 
during a CEFP meeting held late last month simply read out a paper 
containing an abstract policy: "There is no change at all in our 
policy of eliminating fiscal waste." 
 
Proposals that will lead to an increase in the public burden have 
also been put on the back burner. Regarding social-security-related 
expenditures, such as medical and nursing-case expenses, last year's 
economic guidelines adopted a 1.1 trillion yen cut in national 
expenditures. Ota tried to draw up a reform road map based on that 
policy. However, the plan was aborted due to opposition from the 
Ministry of Health, Labor and Welfare. As a result, the report 
simply mentioned that a way to achieve the economic guideline for 
fiscal 2006 within fiscal 2007 will be indicated. 
 
Medical treatment fees are to be revised at the end of this year, a 
practice that takes place every two years. However, in the 
guidelines, the Abe administration did not touch on this issue, 
giving consideration to the Japan Medical Association, a large bloc 
of votes for the LDP. A hike in the consumption tax has been put off 
until after the Upper House election, with the report noting that 
full-fledged discussion on reform of the tax system will be pursued 
from this fall. 
 
SCHIEFFER